Quiz 5 - Quiz5 DueonDecember3...

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Quiz 5 Due on December 3 Questions 1 to 8 are based on the following information relating to company XYZ: Book value of assets = $300,000, Book value common equity = $150,000, Book value of debt =  $100,000, Book value of preferred stock = $50,000 Number of common shares outstanding = 10,000, Number of preferred shares = 1000 (face  value is $50) Market price of common stock = $20, Market price of preferred stock = $60 Preferred dividend per share = $6 Annual coupon rate on debt = 7.5%, Yield to maturity = 9%, Time to maturity = 15 years Beta of the stock = 1.10, risk free rate = 4%, expected return on market = 10% Tax rate = 40% Assume that there are no floatation costs. 1. What is market value of the firm? A. $312,886 B. $347,909 C. $363,108 D. $371,565 E. $392,173 2. What is the weight of common equity?
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A. 0.5749 B. 0.5832 C. 0.5961 D. 0.6018 E. 0.6127 3. What is the weight of debt? A. 0.2994
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Quiz 5 - Quiz5 DueonDecember3...

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